Does your business have an advisory strategy?
Aug 4, 2015 • By Andrew Horton MBA, President of mySMEAdvisoryBoard.com
Ever wish you could separate the fools from the geniuses while keeping an open mind to new business advice? You’re not alone. Merchants turned to the advice of formal boards as early as fourteenth century England. There’s no doubt that the fresh perspective of seasoned, external experts is critical in turning a business into something much bigger than a one-person-show. True wealth only comes with scale and taping into the efforts of others, while staying in control.
In your grandpa’s time, assessing the quality of business advice was as easy as assessing the person giving it. A raised eyebrow or a tilted frown said it all. His heuristic remains as true today as it was then, but in today’s information and innovation economy there’s certainly more to consider. Good advice and specialized knowledge are more important than ever, but bad advice is also more abundant than ever. Advice can range from free to expensive, but its quality isn’t always reflected in its price. You’ve likely come across your own examples of fools charging as though they’re geniuses. Furthermore, advice can often come with big strings attached in the form of equity.
Today’s leaders of small and mid-size enterprises need an explicit advisory strategy to sort through potential sources of advice and determine maximum ROI. That’s a nicer way of saying they need to have a reliable way to distinguish fools from geniuses, and well, everything in between.
An advisory strategy should encompass the following:
- Quality external advice that challenges your perspective and asks tough questions.
- Your commitment to be open minded and listen to external perspectives—it doesn’t mean you have to act on the advice.
- Broad insight that fuels growth, guides operations and addresses risk (strategy, sales/marketing, finance, HR, legal, operations and technology).
- Helps increase access to funds (credit and/or equity).
- Maintains flexibility and keeps you in control.
- Matches your budget.
- Conveniently fits within the intense time demands on your schedule.
In building your advisory strategy to meet these criteria, you’ll want to first consider the full spectrum of types of advice, because there are a number of innovative new ways to get high impact advice at strong ROI. The true cost of acquiring advice isn’t limited to the financial outlay involved. It includes the time and distraction burden required.
Sorry, we don’t have a secret method for attracting geniuses and repelling fools. But we do have an insightful framework for cutting through the clutter. Moving from left to right on the scale below involves more in-depth advice at generally escalating total cost.
Free Generic — Free Personalized — Paid Generic — Paid Personalized — Equity for Personalized
Each type of advice has pros and cons and is optimal for different purposes. Keep in mind that no advice is free of bias. The very nature of advice is that you’re tapping the insight of a person for their unique perspective. Don’t get caught up in seeking 100% objective advice that doesn’t exist. Your focus should be on obtaining a balanced set of advice from a variety of perspectives.
Free Generic Advice
Think of this as the classic Google search. Done right it can produce brilliant and timeless insights, but it typically yields more guiding principles than personalized advice. How can it be anything else, as it’s instantly available to millions of people? That’s not to say that free, generic advice isn’t critical. It’s vital to have your head around the foundations, to make sure you’re not paying to reinvent the wheel with paid advisors. Top notch resources of this type include:
- Entrepreneur.com (www.entrepreneur.com): This site is a classic go to for entrepreneurs—quite simply a staple that you should revisit often.
- Forbes (forbes.com/entrepreneurs): Another classic that should be on your regular return list. This is a proven brand that makes sure it has quality content.
- Magazine (www.inc.com): This magazine provides great content, relevant from start-up to mature business stage.
- Meetup (meetup.com): This amazing site isn’t used as much as it should be. Those who’ve discovered it are hooked. Use it to network with almost any conceivable group that is key to your business.
- Startup Nation (startupnation.com): This site consolidates great articles from seasoned contributors. It covers start up and growth stages and a full range of topics.
- Small Business Trends (http://smallbiztrends.com): This website has strong content and great levels of engagement with readers. Coverage is broad and insightful.
- Google/Bing (you already know the URLs): You probably use search engines so much that you take them for granted. Don’t forget how powerful they are.
- US Small Business Administration (sba.gov): This government site provides reliable information that also incorporates links to helpful government data sources.
- Government of Canada (http://www.canadabusiness.ca/eng/page/2793): The Canada Business Network provides an immense list of free and paid resources. This page also provides links to excellent provincial and territorial government resources.
- AllBusinessExperts (http://experts.allbusiness.com): Solid expert contributed content on a range of topics makes this a high value destination.
- Quora (quora.com): A free question and answer site, this resource can provide powerful crowdsourced intelligence. However, because interactions are public, there’s no doubt you’re going to want to keep your use of this one to generic issues.
Free Personalized Advice
Free advice that’s also tailored to your situation provides the best of both worlds; specific, actionable insight and strong ROI. Many excellent government programs provide seasoned experts that deliver highly personalized advice at no charge. Active private sector experts also often provide this type of guidance in order to develop new client relationships. It’s always important to deal with reputable experts that genuinely seek to earn your business by providing free, personalized insights. Such relationships should never be geared upon pressure to do paid business. By providing free, personalized guidance, true experts know that they are maximizing their chances of being selected when you are seeking to pay for further in-depth insight and assistance in implementation.
Top-notch sources of free, personalized advice include:
- SCORE (score.org): This volunteer organization spans the US and provides free mentoring for small businesses. It is highly personalized and high quality.
- Canada Business Network (canadabusiness.ca/eng/page/contact): This Government of Canada resource provides links to many free and paid sources of tailored business advice. It includes links to private sector resources as well as high value provincial and territorial government resources.
- mySMEAdvisoryBoard.com (www.mySMEAdvisoryBoard.com): This free platform connects every small/mid-size organization to its own dedicated board of advisors, covering sales/marketing, legal, HR, finance, IT/operations and strategy (disclosure: the author of this article is associated with mySMEAdvisoryBoard.com).
Paid Personalized Advice
Paid, personalized advice typically comes in the form of consulting. Consultants are available in every conceivable area of business and will dive deep into understanding your unique situation and crafting customized solutions. Although consulting can be purchased under a range of pricing models—hourly, per diem, retainer or by project—it involves the costly, up-front purchase of expert time. That cost may be small in the long-run if the assignment yields strong insights, but SMEs generally find it hard to direct much funding to advice when they need execution, without burdening cash flow. Consulting is an important part of the advisory mix, but it must be approached carefully. It’s critical to hire consultants that have done what you want done and will help you get it done. Determining specifically what you want from a consultant is vital to ensuring that the cost delivers a strong ROI. Ask yourself whether you’re seeking an expert for specific advice that doesn’t exist within your organization or whether you need a facilitator to leverage existing organizational knowledge in taking you from point A to B.
Paid personalized advice isn’t limited to traditional consulting. There are a number of additional innovative resources available today. Here are some you may find helpful.
- Government of Canada Directory of Accredited Professionals (http://www.ic.gc.ca/eic/site/ccc_bt-rec_ec.nsf/eng/h_00006.html): The Government of Canada maintains this very helpful list of accredited professionals.
- Government of Canada Directory of Business Consultants (http://www.ic.gc.ca/eic/site/ccc_bt-rec_ec.nsf/eng/h_00007.html): The Government of Canada maintains this very helpful list of business consultants.
- Guru.com (www.guru.com): This website puts an army of freelancers at your disposal and keeps you in control of cost and terms.
- UpWork (upwork.com): Similar to Guru.com, this site puts the power of a community of experts-for-hire at your disposal, on your terms.
- Clarity (https://clarity.fm): This website allows you to hire experts at a few dollars a minute. Pay only for the advice you need without racking up your budget. As long as you’re very specific in your ask and use an advisor with appropriate expertise, this option provides very strong ROI.
- The Alternative Board (thealternativeboard.ca): This organization connects paid local members in person on a regular basis so they can coach and advise each other.
- Institute of Management Consultants (imcusa.org/?page=FINDACONSULTANT): This industry association allows you to search for an applicable consultant across the US, based on your specific criteria.
Equity for Personalized Advice
With the importance of smart money—venture capital, angel funds, private equity etc.—in today’s information and technology driven economy, much advice is tied to capital. Successful entrepreneurs often seek to invest in new ventures, and beyond their money, their personal experience can play a pivotal role in guiding your business. Even though the advice and mentoring can be game-changing, this is the most costly form of advice. You’re literally giving away a portion of your business. It’s important to tread carefully in this regard, as smart money investors often require control of your business. There are many success and disaster stories in this arena and plenty of proponents for and against relying on advice tied to capital.
The needs of your organization will certainly change over time, which requires a flexible advisory strategy. A guiding principle to keep in mind is to start by leveraging free, time-saving resources and pay for additional drill-down expertise when it’s specifically needed. Regardless of the particular resources you use at various points in time, a cornerstone of your strategy should be to establish a formal advisory board—a group of trusted advisers that is regularly available to help you make better business decisions and develop an effective long-term vision. Advisory boards have no decision-making powers and carry no legal liability toward your company, so they’re very flexible.
Sound important—but also something you don’t have time for right now? If so, keep in mind that a 2014 study by the Business Development Bank of Canada found that sales averaged 24% higher at businesses with an advisory board and productivity increased an average of 5.9% in the three years following formation of the board. You’re not alone, because their research also showed that only 6% of Canadian businesses had an advisory board, largely due to the time constraints that used to be required. Many businesses are only aware of the time consuming face-to-face model of the past. Today’s online tools, like mySMEAdvisoryBoard.com, put a dedicated advisory board at your disposal on demand, by email. Hopefully these statistics inspire you into action. Today you truly can have the benefit of your own advisory board without the hassle. And, a formal advisory board of seasoned experts is probably one of the most reliable ways to separate geniuses from fools. Good luck.
About the Author
Andrew Horton is President of mySMEAdvisoryBoard.com, a free and time-saving online service that brings together small/mid-size enterprises and advisors into dedicated, formal advisory boards that fuel advice, funding and growth. We are powered by the efforts of a passionate group of volunteers that believes SMEs are the most important element of our economy and society. Learn more at www.mySMEAdvisoryBoard.com.